A power plant in Illinois produces electricity by burning coal.This results in acid rain that kills trees and wildlife in New York.This is an example of

Question

Quizplus · Accepted Answer

This scenario represents an external cost, which occurs when the production or consumption of a good or service imposes costs on third parties who are not involved in the transaction. In this case, the power plant is imposing costs on the environment and wildlife in a different state, which is not accounted for in the market price of electricity.

A Power Plant in Illinois Produces Electricity by Burning Coal